Over the past two decades, we have seen our database of residential property investors grow to encompass many different groups.

‘Mum and dad’

Predominantly, those aged in their 40s, 50s and early 60s who have paid down a vast proportion of the mortgage on the family home, and are now looking at a long-term investment with one eye on retirement, and the other on being ‘comfortable’ from a passive investment and income stream

Experienced

Those who are very ‘gung-ho’ with their investment strategies, and are willing to take on high levels of debt – cognisant that they can fund repayments from rental returns across a portfolio of generally more than five separate properties

‘Doer-uppers’

Generally, these are ‘tradies’, usually builders or hammer hands, but also gib stoppers, painters, and electricians, who can devote some of their ‘spare time’, to renovating older homes and giving them a refreshed modern feel

Speculators

Those who are purchasing purely on the back of property prices rising. This category declines when prices are in the ‘down’ phase of the residential property cycle but becomes increasingly more active during the ‘up’ phase that we are starting to see emerge now.

For ‘doer-uppers’, the finished project has to be delivered to quite a high standard to achieve a strong return as buyers have become more discerning. This means double glazing, a new kitchen with granite benchtop, a bathroom with tiled areas, and usually heat pumps throughout.

The days of the first-home buyer purchasing something that needs substantial modernising or renovation are mostly long gone. Some first-home buyers though are picking up older stock, mainly being sold by investors as tenancies end and they decide to sell instead of carrying out the work to bring it up to modern standards.

The Bayleys Canterbury residential property investment team is noting that investors are very active seeking out two-bedroom units – particularly larger two-bedroom properties where they can add an extra bedroom without undertaking substantial structural work.

We are also seeing higher buyer interest in what is colloquially known as ‘sausage block’ flats – that is red brick, single-level, two-bedroom units usually in blocks of between three and five dwellings.

Generally built in the late 1960s through to the 1970s, these solid units are prime for renovating and modernising to create a low-maintenance residence which can generally be picked up around the mid $300,000 level. This makes them perfect for owner/occupiers looking for live-in, do-up projects where they can refurbish rooms one at a time without too much inconvenience. And then they are relatively easy to find tenants for.

Figures from the Ministry of Business Innovation and Employment’s Bond Centre records that the median rent across all properties in Christchurch was up $20 a week at the end of 2023 compared to the same period in 2022.

Across the entire country, the biggest increase in median rents last year was for two-bedroom apartments/units. In Christchurch, the Bayleys Canterbury residential investment team note that demand for two-bedroom properties runs reasonably neck-and-neck with three-bedroom houses.

Independent property economist Tony Alexander notes in his latest Mortgage Advisers’ Survey published in February 2024 that 28 percent of survey respondent mortgage brokers are working with more investors. That portion is on par with January’s net 29 percent, and is consistent with other months since September. The general consensus is that “Investors are slowly coming back - but it’s very slow, and they are weary.”

Tony Alexander's latest Investing Insights report highlights the importance investors place on residential investment property as part of their overall revenue-generating portfolio. Of the 30,000 respondents, two-thirds have residential property within their portfolio, with 39 percent indicating that residential property makes up more than half of the value of their portfolio. By comparison, 20 percent of Investing Insights respondents hold commercial property assets.

For those looking to get into the residential real estate investment sector in and around Christchurch, the combination of house prices now at a low point of the current property cycle – along with a tapering of mortgage interest rates and rising wages – means that the opportunity for first-home buyers and entry-level investors who often compete for dwellings when they come onto the market is now looking particularly attractive.

The team at Bayleys Canterbury is always happy to discuss the residential investment market, we look forward to hearing from you.